Fed Stuck With BILLIONS In Mortgage Securities

nytimes.com:

A wide range of economists say the Fed's program -- so big that purchases outstripped the issuance of new securities in some months -- helped to preserve the availability of mortgage loans and helped to hold interest rates near record lows. Rates that exceeded 6 percent in late 2008 remain below 5 percent today.

But the Fed now must deal with the cleanup.

Read the whole story: nytimes.com

Comments

[WorldisMorphing]

11:41 PM on 07/26/2010

...something's fishy here...
The 'Rule of Law' is rigged...pretty much to death...in my opinion...

[dukeitout]

07:26 PM on 07/24/2010

The article says the "Fed (is) holding a vast pile of mortgage securities — basically i.o.u.’s from homeowners — that it does not want and cannot sell."

Gee, in 2006, 2007, and 2008 the big Wall Street firms were confronted with the same problem and they used an ingenious method to rapidly dispose (sell) of those junk mortgages. They merely packaged them together, rated them AAA and sold them world wide. Problem solved. Next.

The Fed may want to also insure them against failure, which of course will happen. The rating agencies will work with them, for a healthy fee naturally. And it seems the actions will be legal although they may be subject to a small fine, if I'm reading things correctly.

[AZreb]

10:29 AM on 07/24/2010

Wait "until the economic recovery is well established" - and who knows how long that will take? The rosiest projections don't look for recovery in the next year or two.

[plumbergirl]

09:39 AM on 07/24/2010

In the west side Columbus,Ohio can't they just sell a mortgage security and mule for a dollar?

[Pandaforum]

01:18 AM on 07/24/2010

thanks obama.

[GenosseJoe]

11:56 PM on 07/23/2010

Banks, who had too much of the defaulted mortgages and their derivatives had collapsed or saved from the collapse by FED's intervention (our unsustainable stimulus is funded jointly by China and dollars freshly printed by FED).

Now FED is holding too much of the defaulted mortgages and their derivatives.
FED's credit rating is the only backup for our paper money called dollar.

Is this article about looming threat of the dollar's collapse and hyperinflation?

[nopilikia]

09:59 PM on 07/23/2010

Gee, I wonder just how much that trillion plus loan (plus=probably 2 trillion more) is worth now to the American Taxpayer who bought all that paper? Did Congress and the Fed make the American Taxpayer a Warren Buffett type investor or CHUMP? My guess is CHUMP.

[falco]

08:44 PM on 07/23/2010

Here's an idea. Why don't we find out how much money the owners of the Fed are worth (those original families). I never see Rothschilds name mentioned, nor Rockefeller, nor any others. They are never on the "ten riches people in the world" lists. Neither is Elizabeth Windsor, who is the legal owner of about 6,600 million acres of land, one sixth of the earth’s non ocean surface. And we will kindly ask them to bail out the world. They don't even have to start with America (send some food to nations that have starving children first). But they have the money to do it. Their tentacles have created this mess and it is time they fessed up and then did the right thing.

[29bela]

11:32 PM on 07/23/2010

Isn't it cute how they buy the bad papers and shift it to taxpayers?
Addorable!
Amazing!
Smart!
Criminal!
Shameful.

[toosinbeymen]

06:11 PM on 07/23/2010

Nice work, Geithner, Paulsen and Bernanke. In 10 years people will be wondering why you're not in JAIL.

[29bela]

11:35 PM on 07/23/2010

They will say that they saved us from dissater of enormous size. We want dissaster, because nothing else will help anyways and all dirt needs to be properly desinfected before we start fresh again.
Time is now.

[Siebenstein]

02:27 AM on 07/24/2010

People seem to wonder that in this country a lot. GWB, Cheney, etc. never will see that entity from inside.

The American people are shown over and over how to be unethical, immoral, crlmln@l, and if rich and famous, get off and never worry. Anybody surprised about this country's crlme rate?

[29bela]

11:45 AM on 07/24/2010

No, I am not, poverty is crime creator.

[jcaunter]

02:56 PM on 07/23/2010

The New York Times article really goes a long way towards making this Fed situation sound reasonable and straight forward, while it was actually just one of Timmy, Obama, and Bernanke's favored methods of transferring trillions of dollars to the Too Big to Fail Wall Street banks in 2008.

This whole situation screams of massive, multiple-trillions of dollars fraud against the American people and the American currency, and the NYT makes it sound so reasonable and sanitary. Maybe because they are shilling for Obama?

[falco]

08:34 PM on 07/23/2010

Fanned. "This whole situation screams of massive, multiple-trillions of dollars fraud against the American people and the American currency.." And they know we know.

[DebtNavigation]

02:43 PM on 07/23/2010

"Dealing with the cleanup" will be VERY profitable for the Fed. They undoubtedly took performing portfolios of cherry-picked assets off shaky banks at deep discounts, and to the extent loans in those portfolios fail to perform, they will form an outfit that will go after those borrowers HARD. The Fed will make today's junk debt buyers look like sissies. Americans will need to fight this menace.

In Mexico in the mid-'90s Wall Street engineered a currency coup that tripled the debt owed by small businesses and family farms and also allowed for them to be massively ratejacked on top of it. Mexicans consequently formed the "el Barzon" movement and pushed back Wall Street and deposed their ruling party of 60+ years. In this country YouTube phenom Ann Minch has already declared the debtors' revolt and begun going after them http://www.revoltstartsnow.com

If you've been pushed under, you can read every other page of my book for free: http://www.scribd.com/doc/25443175/Debt-Hope-Down-and-Dirty-Survival-Strategies-Evaluation-Version-Complete

[jcaunter]

02:59 PM on 07/23/2010

That's not what they did. They skimmed the bottom of the sub prime barrel for the worst crap they could find, and bought it from the too big to fail banks at near face value.

It was one of the Obama administration's methods of indirectly transferring trillions of dollars to the Big zombie banks to keep them walking that he didn't have to report to the American people. And he's confident the the American people are too incurious to figure out what's going, because, you know, the Mainstream media isn't going to tell them about it.

[DebtNavigation]

05:12 PM on 07/23/2010

The Fed being made up of the top echelon of banks, I'm dubious about that being the ACTUAL case (although if made sense to spin it that way to the press even if it was a lie--people were given more confidence in the banks they were dealing with on a daily basis, and that stopped the slow-mo bank runs at the ATMs).

The banks were coming to the Fed hat-in-hand ... whatever the transactions may have looked like when presented to the public, you can bet your boots behind closed doors they were on sharp terms.

[Mr Hankey]

07:58 PM on 07/24/2010

Fav'ed.
Thanks for the links.
I've started to read the online version of your book, and I had seen Ann on youtube a while ago because my mortgage is unfortunately serviced by BAC.

Thank you for sharing your knowledge with the world.

[mezcal]

02:03 PM on 07/23/2010

“It compromises their integrity and their inflation-fighting mandate, because fighting inflation would be a direct detriment to their portfolio,”

Welcome to heII, Ben.
Idiot.

[Mike4Obama]

01:51 PM on 07/23/2010

You would have thought after the MBS purchases ended, interest rates would have shot up. Instead, it appears someone is still purchasing them. Housing markets are increasing in many markets. Investors will purchase them. We'll move on. Things will improve.

[slogward]

01:47 PM on 07/23/2010

At least in the States the Fed tells you the truth about that.

Get this fraudulent farce from the eurobanks...

http://nbyslog.blogspot.com/2010/07/breakingdismay-as-eurobank-stress-test.html

[Siebenstein]

02:28 AM on 07/24/2010

Truth about what?

[almost homeless]

01:35 PM on 07/23/2010

“In my view, any judgment to expand the balance sheet further should be subject to strict scrutiny,” Kevin M. Warsh, a Fed governor, said in a speech last month in Atlanta. He warned that new purchases could undermine the Fed’s “most valuable asset”: its credibility. "

The fed is as credible as a $3 bill with donald duck on it.

[OSCPJ]

05:28 PM on 07/23/2010

While the FED is not credible. It has its own job.

What exactly is your problem with the statement. Would you argue that the FED should not scrutinze what they buy?

[viperhawk2k4]

07:10 PM on 07/23/2010

The "FED" Shouldn't even EXIST!